At the global energy summit over the weekend, Saudi Arabia announced a production increase of 200,000 barrels for the rest of year (old news) and a promise to boost drilling capacity “if needed” from 11.4 million barrels a day now to as much as 15 million barrels a day by 2018 (too late). Oil is up more than $1: (WSJ):
A capacity increase of that magnitude would be extraordinary for a country that has never produced more than 11 million barrels a day. To get there, Saudi Arabia would have to squeeze greater quantities of oil primarily from huge fields that have been in production since as far back as the 1940s — far from a simple task…
Some oil experts expressed scepticism about the Saudis’ ability to boost output to 15 million barrels a day. “I am afraid that we are going to see the big fields [now in production] top off at 12 million barrels a day or so,” said Edward Price, a former president of Saudi Arabian Oil Co., or Aramco, who keeps up with developments there. “Even in Saudi Arabia, there are resource limits.
The markets were already aware of Saudi Arabia’s plans to increase its production capacity to 12.5 million barrels a day by the end of 2009. Promises for 2018 aren’t going to cut it (see: offshore drilling). The world was looking for more immediate relief and OPEC can’t (or won’t) provide it, no matter how much they’re afraid they’re killing their customer. They haven’t stopped blaming “speculators,” though.